The interpretation of Section 141 of the NI Act, requiring specific allegations of being in charge and responsible for the conduct of the company's business to hold a director liable under Section 138.

JUDGMENT

(Prayer: Criminal Original petition is filed under Section 482 of Criminal Procedure Code, to call for the records relating to CC.No.241 of 2018 pending on the file of Fast Track Court-III, Saidapet, Chennai and to quash the same.)

1. This criminal original petition has been filed to quash the proceedings in CC.No.241 of 2018 pending on the file of Fast Track Court-III, Saidapet, Chennai.

2. The first respondent filed complaint for the offence punishable under Section 138 of NI Act alleging that the accused raised a request to borrow loan from the first respondent a term loan of Rs.10 crores by the application dated 16.12.2013. Thereafter, the said loan was sanctioned in favour of the first accused company in which all the directors signed on behalf of the first accused company. The said loan was availed for the purpose of meeting the Working Capital margin money requirement for the financial year 2015. The accused also agreed to repay the said loan with interest at the rate of 0.25 % above the prime lending rate of the first respondent and so the interest payable by the accused at the time of sanction was 13% per annum. They specifically agreed to repay the loan by 72 monthly instalments comprising of Rs.13,89,000/- per instalment. The first accused company represented by the second accused entered into an agreement for loan dated 23.04.2014. However, they failed to repay the said instalments as agreed by them from 10.03.2015. They committed continuous default. The demand was made by the respondent under loan recall notice issued to the accused to the tune of Rs.9,99,35,473/-. On receipt of the same, in order to discharge their liabilities, the accused had issued three cheques for a sum of Rs.50,00,000/- (2 cheques) and Rs.25,00,000/- respectively. All the cheques were presented for collection and the same were returned dishonoured for the reason 'funds insufficient'. After causing statutory notice, the respondent lodged complaint for the offence punishable under Section 138 of NI Act.

3. Though notice was served on the first respondent and his name is also printed in the cause list, no one appeared before this Court on behalf of the first respondent either in person or through pleader.

4. The petitioner is arrayed as the third accused. Admittedly, she is one of the Directors. On perusal of the complaint, revealed that the second accused represented on behalf of the first accused company. He only entered into loan agreement with the first respondent on 23.04.2014. Though the other Directors signed accepting the sanction order, the role of the petitioner is not stated in the complaint. Except in the long cause title of the complaint, nothing whispered about the role played by the petitioner in the day to day affairs of the company and also in the process of loan availed by the first accused company. Further, the petitioner is not signatory of the instrument and she has been implicated as an accused without any basis. She has been implicated as accused only because she is also one of the Directors of the first accused company. If a Director is implicated as an accused, the first respondent ought to have satisfied the provision under Section 141 of NI Act. It clearly says that there must be specific allegations as against the accused person in a complaint and in the absence of which, the same is unsustainable. The petitioner is not in charge and not responsible for the conduct of the business and the petitioner has been made Director since she is the wife of the second accused for satisfying the requirement for registration of the company. She is being house wife, she is nothing to do with the day to day affairs of the company and she had not involved in the affairs of the company.

5. In this regard, it is relevant to rely upon the judgment of the Hon'ble Supreme Court of India in the case of Sunita Palita and Others Vs. Panchmi Stone Quarry reported in (2022) 10 SCC 152, wherein it is held as follows:

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